With the House and Senate tax bills off the floor and shifting into conference committee to iron-out differences, action is beginning to pick up at the State Capitol.
While there are good things in both bills from a county perspective, they stand in stark contrast on the key issue of how to address property tax relief. If you are a residential or business property tax payer in Minnesota, the House bill holds the clear advantage by providing vital increases to counties and local governments through general aid increases.
Counties operate as a local administrative arm of the state to carry out state-mandated programs relating to health and human services, public safety, land use, transportation, courts and other critical service areas. We do the work the state tells us to do, and the state provides the funding or “aids,” to cover costs.
Well, that’s how it’s supposed to work anyway.
State funded County Program Aid (CPA) is a general purpose aid provided to counties by the state as an off-set to county costs for administering state-mandated programs and a recognition of the impact mandates have on local taxpayers.
It is important to note that unlike other aids, CPA provides property tax relief to each of Minnesota’s 87 counties, which translates to tax relief benefitting every Minnesota property taxpayer.
When CPA is cut, with no corresponding mandate relief, county leaders are forced to make hard choices with limited options. In worst cases, counties are faced with the need to increase property tax levies to pay the costs of state mandated directives that arrive with no funding to pay the freight.
Facing a beastly $4.5 billion budget deficit in the early 2000’s, Legislators put the axe to almost $200 million in CPA funds, a devastating cut that has kept the pressure on local property tax payers ever since.
Even so, resourceful counties can make a little go a long way. A much-needed 2017 formula change and nominal aid increase, along with some strategic belt-tightening, allowed rural Stevens County to bring some welcome relief to county property owners.
Stevens County aid dropped by about $1 million from the crash in 2003, until it flat-lined at around $147,000 in 2016. The 2017 formula change and aid package lifted its CPA back up to around $500,000 – or half of what they received before the deficit cuts. They applied the revenues to directly offset property taxes and were able to reduce their 2017 operating levy from a stiff 7.96% increase to a manageable 1.5% increase the following year.
While counties continue to labor under any number of unfunded mandates – Stevens County CPA was more than swallowed-up this year by a 10% unfunded human service mandate – we appreciate the House provision to restore CPA to 2001 levels in its current tax package.
While the legislature continues to deliberate, we do look forward to making our case for further investment in County Program Aid as part of the mission for true property tax relief for Minnesotans.
Pope County Commissioner
MN Rural Counties chair
MN Rural Counties is a 30 member advocacy organization representing the interests of Greater Minnesota counties across the state.